Kay Hagan tries to ride populist wave

by Jordan Green

In a year when widespread unrest among the electorate, President Bush’s exit from the White House and new wind in the Democratic Party’s sails threaten to vastly rearrange the makeup of Congress, Senate candidate Kay Hagan – a state lawmaker from Greensboro with backing from the business and political establishment – has struggled to outpace a dark-horse progressive from Chapel Hill named Jim Neal in the run-up to the Democratic primary.

The winner of the May 6 vote takes on Republican Elizabeth Dole, a one-term incumbent.

“I really think North Carolina needs a fresh voice to represent us in Washington,” Hagan told a group of students at Elon University Law School in Greensboro earlier this month. “Washington keeps coming up short. We in North Carolina do things right.”

In a finely calibrated video message posted on her campaign website and echoed in speeches, Hagan touts her 10 years of experience in the NC Senate, where she has ascended to the perch of co-chair of the powerful Appropriations Committee. Hagan stresses the accomplishments of the governing body rather than her own fights as an individual member; she hymns the values of compromise over partisanship, pragmatism over principled stand.

“We need accountability to end the war in Iraq, so we can reinvest those resources here at home,” she tells viewers on her website. “How can Washington reject healthcare for 123,000 North Carolina children while continuing to spend hundreds of billions of dollars on this mismanaged war? Making those kinds of decisions is hard, but I know it can be done because those are the kinds of fights I’ve led in the state Senate. We produce balanced budgets every year in Raleigh, and even pick up the slack when Washington comes up short. We’ve increased access to healthcare for 25,000 children, given the North Carolina National Guard equipment beyond what Washington’s provided.”

A graduate of Wake Forest University Law School, Hagan told the law students that she didn’t have any lawyers in her family “except my uncle, who was a state senator in Florida.” Her involvement in politics dates back to when, as a girl, she placed bumper stickers on cars for that uncle, Lawton Chiles, who went on to be elected governor of the Sunshine State. Hagan’s father, a land developer and warehousing magnate, also went into politics, winning election as mayor of Lakeland, a modest-sized city situated between Orlando and Tampa.

And in 1992 and 1996, Hagan managed North Carolina Gov. Jim Hunt’s reelection campaigns in Guilford County. In 1998, she unseated Republican incumbent, John Blust, now a member of the House, taking over his seat in the state Senate.

Following months of speculation, Hagan said last October that she would not challenge Dole for her US Senate seat. Three weeks later, after Neal, an openly gay financial advisor, announced his candidacy, Hagan reversed herself and entered the race. She quickly earned the endorsement of Hunt, the former governor, who contributed $2,300 to her campaign – among a host of high-dollar donations from North Carolina political heavyweights.

Despite out-raising her opponent more than two to one – as of Dec. 31, 2007, when the campaign finance reports were most recently tallied by the Federal Election Commission – Hagan has struggled to develop name recognition outside of her home district in Guilford County. A poll released by Survey USA on March 11 found that 18 percent of voters favored Hagan, compared to 21 percent for Neal. Forty four percent were undecided.

And despite her stated opposition to the war in Iraq and her lament about cutbacks in the federal State Children’s Health Insurance Program – both emotionally weighted issues among the Democratic rank and file – Hagan has faced skepticism from many in the party’s left wing.

A statement by Hagan at a February candidates’ forum in Winston-Salem indicating support for reauthorization of the Foreign Intelligence Surveillance Act has earned her no-confidence votes from some progressives, among them James Protzman, a Chapel Hill freelance writer who co-founded the BlueNC blog.

“When asked what she would do in Congress in terms of the surveillance bill, she said she would support the bill, which is astounding to me,” Protzman said. “It grants retroactive immunity to all the telecom companies for breaking the law…. That’s almost a litmus test for me as to whether a candidate has the people’s interest at heart or business’ interests at heart.”

He added, “I don’t think she’s beholden to corporate interests; she just leans too far in their direction: telephone companies, banking, power companies. She’s a champion for business.”

Hagan did not respond to numerous requests for an interview for this story.

Protzman also cited the NC General Assembly’s decision to reduce taxes for the state’s wealthiest citizens instead of eliminating the sales tax, which fall heavier on the poor, and legislation that would have provided $40 million in incentives to two tire manufacturers last year as examples of how Hagan’s political orientation favors business interests over ordinary citizens.

In a report released in February, the left-leaning NC Budget and Tax Center noted that state lawmakers “gave a tax break to the wealthiest 2 percent of taxpayers by allowing the top personal-income-tax bracket to expire. As a result, North Carolina has only three income-tax brackets, with the highest rate being 7.75 percent for taxable income over $100,000 for married couples.”

Hagan was among 42 state senators who voted for the Job Maintenance and Capital Development Fund. Gov. Mike Easley explained his rejection of the legislation in his veto last August: “HB 1761 would set a dangerous precedent for North Carolina’s economic development policy, and is not fair to her taxpayers. It calls for the state to give up to $40 million in cash to an existing company in one county with little or no regard for how much the company actually pays in state and local taxes, what wages it pays now or in the future, or whether it lays off nearly 25 percent of its workforce. Never in the history of the state has anyone given a company up to $40 million and allowed them to lay off hundreds of workers.”

An amended bill, which also garnered Hagan’s support, was eventually signed into law by the governor. It appropriated $60 million for as many as five different grants, and required recipients to pay the equivalent of 140 percent of average wages in the county in which they do business, among other provisions.

During her talk with the law students in Greensboro, Hagan faulted the federal government for not passing an energy independence bill, holding up the renewable energy passed by the state General Assembly last year as an example of how politicians in Raleigh get more done than their Washington counterparts.

The legislation requires that public utilities such as Duke Energy and Progress Energy derive at least 12.5 percent of their retail sales from renewable energy sources by 2021. As a compromise with the energy sector, the General Assembly shifted the cost of building new power plants from industry to consumers, and critics such as Rep. Paul Luebke worried that the legislation will pave the way for the energy industry to build new polluting coal-fired plants instead of inducing them to pursue renewable sources, such as wind and solar, more aggressively.

“Prior to this act, an electric public utility was responsible for bearing the construction costs of a generating facility until the generating facility began operation,” the General Assembly Research Division reported in November. “The public utility will [now] recover through rates in a general rate case the actual costs it has incurred in constructing a generating facility.”

Hagan has earned the admiration of colleagues in the Senate, along with Democrats who hold local elected office. Paul Gibson, a Guilford County commissioner, credited her with keeping local elected officials appraised of the state’s consideration of a site in Guilford County for a state juvenile detention center and of the state’s action to relieve county government of the burden of funding Medicaid.

“Kay asked for our input on how it would affect Guilford County and we appreciated that,” Gibson said of the detention center, which the county ultimately blocked by denying a rezoning request. “Kay kept us abreast of what was happening, and what were her instincts as far as how things were going to work out. Even if I didn’t agree, she was very forthright and communicative.”

That approachability is one reason why Gibson contributed $500 to Hagan’s campaign, and why he is eager to see Dole voted out.

“I’ve met with every senator, going back to Sam Ervin, except Dole,” the county commissioner said. “I have never ever laid eyes on Senator Dole, never had the opportunity to shake hands with her and look her in the eye. Maybe that’s my fault; I don’t think so. I think she has not been very accessible.”

Jim Melvin, a former Greensboro mayor and president of the Joseph M. Bryan Foundation who is considered something of a kingmaker because of his political experience and ability to leverage private funding, has contributed $2,000 to Hagan’s campaign.

“She’s one of the most effective, hardworking people I’ve ever met,” he said. “What she says she will do, she’ll do. Or try to do. She can back that up with a great track record in the state Senate.”

Melvin suggested that Hagan’s approach to economic issues would not factor much in her chances at election despite the populist mood sweeping the country.

“A lot of the problems of the economy are just hype,” he said. “My personal opinion is that the economy is not in as bad a shape as some political leaders would like us to think. Everybody will see Kay for just who she is: a legitimate, hardworking person who will go up there, if elected, and do what she thinks is right. That’s what you want.”

In a political season in which constituent demands for solutions to the housing crisis, job loss and inadequate access to healthcare has both energized the Democratic Party and threatened its corporate underpinning, it might be considered something of an irony that both major Democratic challengers in the North Carolina Senate race come from banking and finance backgrounds.

While Hagan’s campaign has been vague on what policies in healthcare or trade she might pursue to help Americans of ordinary means on matters of healthcare and trade, the candidate makes a clear rhetorical nod to the national mood. “Every day I wake up thinking about how I can help North Carolina, making sure people come before powerful special interests,” she says in the opening statement of her campaign video. “And I’ve realized that to make a difference in North Carolina, we need change in Washington. We need a senator to make our voice heard.”

Notwithstanding the insurgency appeal of Neal’s candidacy, he served as national finance committee member first for the Wesley Clark presidential campaign in 2004, and then for the Kerry-Edwards ticket. During the same election he raised money for Erskine Bowles’ unsuccessful bid to fill the Senate seat left open by John Edwards’ presidential run.

Bowles, who is now president of the University of North Carolina system, holds a reputation as a pro-business, establishment Democrat. His wife, Crandall Bowles, who is the co-chair of the Springs Global textile company, made contribution of $4,600 – the maximum allowable amount for an individual donor – not to Neal’s campaign but to Hagan’s.

Hagan’s campaign has also been significantly financed by her family. As of Dec. 31, her campaign had amassed $35,500 from people with the Hagan surname. And she has received $12,500 from members of the Ruthven clan. Hagan holds partnerships and memberships in a handful of Ruthven family ventures, according to records on file with the NC State Ethics Commission.

Amid the banking, finance and textile executives on Hagan’s donor list, two stand out.

Two executives from Greensboro-based Hearthside Homecare contributed $500 each to the campaign. Those are modest amounts compared to what other donors gave, but more than a combined $557 in wages that two employees accused the company of not paying them last year. A recent YES! Weekly investigation found that a payroll administrator from Hearthside Homecare promised the NC Wage and Hour Bureau to look into the claims then failed to return further calls, after which the state closed its investigation.

The Hagan campaign received a more generous contribution came from Carl Icahn, a New York City financier with holdings in real estate who is described by the Hoovers business website as a “billionaire corporate raider.” Listed in Forbes magazine last year as the 18th richest American, Icahn’s net worth is reported to be more than $14.5 billion.

Icahn contributed the highest allowable amount, $4,600, to the Hagan campaign. Icahn has funded both sides of partisan divide, giving $100,000 contributions each to the Democratic Senatorial Campaign Committee and the National Republican Senatorial Committee in October. Two other Democratic challengers in Senate races have shared in the spoils with Hagan: Oregon’s Jeff Markley and New Hampshire’s Jeanne Shaheen. Icahn also gave $4,600 to the campaign of Rudy Giuliani, the Republican mayor of New York whose presidential campaign fizzled in January. Last April Carl Icahn and Gail Icahn were named as representatives of the private equity industry to the Giuilani Presidential Industry Leaders group, part of the candidate’s campaign finance team.

In her talk with the law students in Greensboro earlier this month, Hagan remarked that money buys television advertising, which translates into votes. She acknowledged that she may need something more, noting how Democratic presidential aspirant Barack Obama has rode a wave of energy sustained by small donors whose enthusiasm affects friends and family members, who in turn make contributions of their own and, more importantly, vote.

“If you look at who gives to campaigns, this is year is different,” Hagan said. “In years past, it was a successful white businessman. We want to have a more open, transparent process. I think one way we do that is we get more small contributions because then you get more buy-in.”

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